KBRA Unveils Preliminary Ratings for BMO's Latest CMBS Deal

KBRA's Preliminary Ratings Announcement

KBRA is pleased to announce the assignment of preliminary ratings to 13 classes of BMO 2024-5C8, a robust CMBS conduit transaction totaling $991.8 million, backed by 40 commercial mortgage loans. This unique transaction is secured by an impressive portfolio of 98 properties across various regions.

Composition of the Collateral Properties

The collateral properties in the BMO 2024-5C8 transaction are spread across 29 metropolitan statistical areas (MSAs). The biggest shares of the pool come from New York at 36.2%, followed by Atlanta at 7.1%, and the Washington metropolitan area, covering Northern Virginia and Maryland, at 5.8%. This diverse asset pool includes exposure to multiple property types, with significant portions from multifamily properties (42.6%), retail spaces (20.6%), and mixed-use developments (18.4%).

Details of the Loan Balances

Each loan included within this transaction has principal balances varying significantly, with amounts ranging from $3.7 million to $71.0 million. The largest loan is the Queens Center, making up 7.2% of the pool, a notable super-regional mall situated in New York City's borough of Queens. The five largest loans represent 33.2% of the pool, which also includes 310 Grand Concourse (7.1%), ICONIQ Multifamily Portfolio (6.5%), Black Spruce - Briarwood and Prospect (6.5%), and Colony Square (6.0%). Notably, the top 10 loans collectively account for 54.6% of the initial pool balance, signifying their importance in this transaction.

Evaluation Process by KBRA

KBRA's in-depth analysis reflects a thorough evaluation process, encompassing the analysts' assessment of the financial and operational performance of the underlying collateral properties. This evaluation is integral in determining what KBRA considers sustainable net cash flow (KNCF) and the KBRA value using their North American CMBS Property Evaluation Methodology. Remarkably, KNCF demonstrated a reduction of 11.0% compared to the issuer’s cash flow.

Capitalization Rates and Values

KBRA applied capitalization rates to each asset's KNCF, revealing that these derived values were, on an aggregate basis, 38.0% lower than third-party appraisal values. The transaction's pool has an in-trust KLTV of 93.7%, while the all-in KLTV reaches 98.2%. The KBRA model implements several risk assessment methodologies, including rent and occupancy stress testing, default probability regressions, and loss calculations to effectively determine anticipated losses for each collateral loan, ultimately guiding their credit ratings assignment.

Accessing Ratings and Reports

For those interested in exploring the detailed credit ratings and corresponding documents, the relevant information can be found on KBRA's official channels. The agency continues to prioritize transparency and provides comprehensive details for investors and stakeholders.

Insights into KBRA

Kroll Bond Rating Agency, LLC (KBRA) stands as a full-service credit rating agency, registered properly with the U.S. Securities and Exchange Commission (SEC) as a nationally recognized statistical rating organization (NRSRO). Moreover, KBRA has a robust presence in Europe and the UK, being recognized by the European Securities and Markets Authority and the UK Financial Conduct Authority. KBRA is also acknowledged by the Ontario Securities Commission, enhancing its credibility and scope in the global financial landscape.

Frequently Asked Questions

What are the preliminary ratings assigned by KBRA?

KBRA assigned preliminary ratings to 13 classes of BMO 2024-5C8, reflecting the evaluation of various commercial mortgage loans in the transaction.

What is BMO 2024-5C8?

BMO 2024-5C8 is a $991.8 million CMBS conduit transaction backed by 40 commercial mortgage loans secured by 98 properties.

How does KBRA evaluate credit risks?

KBRA employs a multi-borrower rating process that incorporates analysis of financial and operational performance of properties to determine sustainable net cash flow and assign ratings.

What types of properties are included in the BMO 2024-5C8 pool?

The pool includes a diverse range of properties, focusing on multifamily, retail, and mixed-use types, ensuring varied exposure across major markets.

Where can I find more information about KBRA?

Additional information about KBRA's ratings, methodologies, and reports can be accessed on their official website, where they provide comprehensive credit analysis resources.

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